All About Estates

Estate Trustee Removed for Conflict of Interest

A recent New Brunswick case provides a thoughtful analysis on the removal of estate trustees (referred to as Estate Administrators in New Brunswick).

In his will, the testator had named his sister as his estate trustee.  The beneficiaries of his estate were his two children and his brother, Yves.  However, the deceased’s ex-wife, Theresa, objected to the appointment of the estate trustee and the estate trustee renounced before probate was granted.  Teresa than applied for probate.  Teresa’s position was that as her two children (minors at the time of the testator’s death) form the majority of the estate’s beneficiaries, she should be able to administer the estate on their behalf.  However, the other beneficiary of the estate, Yves, objected to Teresa’s appointment. Teresa brought an application seeking to continue as estate trustee.  Yves brought an application seeking her removal.  The other two beneficiaries of the estate supported their mother’s continued appointment as estate trustee.

The court carefully examined the common law factors required to remove an estate trustee.  The court found the following factors in favour of Teresa’s removal:

  • It was not the testator’s wish to have his ex-wife administered his estate; he named his sister as his estate trustee. A testator’s wishes carry great weight in the law;
  • There was an atmosphere of friction and hostility between Teresa and Yves. While not determinative in itself, the court noted the friction as an added element in removing Teresa; and
  • Teresa had signed a Separation Agreement in which she relinquished her rights to administer the estate. Teresa withheld this release when she applied for probate.

However, in addition to the factors above, the court found that Teresa’s obvious conflict of interest justified her removal.  Teresa’s own evidence was that she was her children’s advocate. As such, she could not possibly treat Yves in an even-handed manner. The conflict was interest was an actual conflict and not just a perceived conflict. For example, Teresa sought to have insurance proceeds payable to the estate paid to her two children instead.  In face of such conflict, she was removed.

The court exercised its jurisdiction and had Teresa removed.  As for costs, the parties had agreed beforehand that costs should not come from the estate and should be paid on a party to party basis.  $10,000.00 was ordered to be paid to Yves, jointly and severally, between Teresa and the other beneficiaries, who supported her appointment.

Thanks for reading,

Diane Vieira

About Diane Vieira
Diane has practiced in the area of estate, trust and capacity litigation since she was called to the Ontario Bar in 2006. Diane obtained her law degree from Queen’s University after completing an Honours Bachelor of Arts degree from the University of Toronto. She also recently received the Certificate in Elder Law from Osgoode Hall Law School. She is a member of the Trusts & Estates Section of the Ontario Bar Association, the Advocates’ Society, and the Toronto Lawyers Association. Diane has chaired various continuing legal education programs regarding estate, trust and capacity matters. She can be reached at dvieira@devrieslitigation.com

0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *